Aaron S. Daggett to Frederick T. Frelinghuysen, June 14, 1884

No. 209. Mr. Daggett to Mr. Frelinghuysen.

Sir: In my dispatch of the 31st ultimo (No. 152) I had the honor to refer to the continued collection of Hawaiian customs duties in silver foreign to the United States and Hawaii and of low commercial value, when the existing law on the subject requires all customs payments to be made in gold coin of the United States.

As the silver accepted in the payment of customs duties has for some weeks past been selling at a discount of from 5 to 10 per cent, in exchange for gold, I deemed it my duty to direct the attention of His Majesty’s Government to the subject, claiming that the collection of customs duties in such silver operated substantially as a reduction in duty rates, and was not in accord with the spirit and purposes of the treaty of 1875. I inclose a copy of my note to his excellency, the minister of foreign affairs, under date of May 31st ultimo.

In his reply of the 3d instant (inclosure No. 2) the minister of foreign affairs, without referring to the question of the good faith of his Government in accepting foreign silver at rates above its commercial value in the payment of customs duties, denies that such silver is accepted at the custom-house, but at the same time admits that the “gold checks “of the bank of Bishop & Co., in which the most of the customs duties are paid, are, through an understanding with the Government, cashed into the treasury in silver.

This very unsatisfactory explanation seemed to call for a more specific statement of the situation, and on the 5th instant I addressed a second communication (inclosure No. 3) to the minister of foreign affairs, showing that the “gold checks” of Bishop & Co., are or may be drawn for Mexican dollars at par, and in the same currency may be redeemed into the treasury, thus giving shippers the privilege of paying their customs duties in the face value of silver worth from 10 to 12 per cent, less than gold.

To this his excellency promptly replied (inclosure No. 4, June 5), admitting that the acceptance of foreign silver in the payment of customs duties, if import charges are thereby in effect reduced, is a departure from the spirit of the treaty of 1875, which had escaped the attention of His Majesty’s Government, and promising early action by the Legislative Assembly providing for the resumption of the collection of customs duties in gold coin of the United States or its equivalent.

My final note on the subject (inclosure No. 5, June 6), accepts with satisfaction the liberal and friendly concessions of His Majesty’s Government, and relies upon the Legislative Assembly to restore the gold standard in the collection of customs duties.

To accomplish this object a number of bills are now before the Legislature, and I feel confident that the payment of duty charges in foreign silver will soon be discontinued.

Very respectfully, &c.,